These stories highlight the fundamental problem with the <i>popularized</i> "passive income" approach: the goal is usually to support a lifestyle, not to provide value to customers. This can easily result in a huge disconnect between the business owner and the realities of the business. Unfortunately, if you don't handle your business, it's bound to handle you.<p>It is absolutely possible to run a sustainable, highly-profitable business without working 16 hours a day. But there are relatively few businesses that will run themselves <i>completely</i>, and people who want to spend the vast majority of their income every month probably lack many of the traits of successful business owners to begin with.
Ex-affiliate fraud manager here.<p>Here's the kicker about affiliate marketing: the unethical practices exist because the system is set up in a way that there is no real incentive for mitigating fraud.<p>The merchant who pays the bottom line might have no idea that fraud is happening - they only see the traffic numbers going up without realizing that this was already coming in through other means (bought or organic).<p>The fact that the affiliate management or program might get their salary or bonus based on the size of the program (ie. traffic) does not help the situation at all. The largest affiliate in the program could be a sophisticated thief without anyone knowing any better!<p>There's also the issue of technical illiteracy from the operating parties - they all claim that they fight fraudulent practices, when in fact they might not even know what is affecting them specifically. This is obviously to lure in more affiliates, clueless-hopeless people who bought in (often literally in the form of SEO and other infoproducts) on the dream of passive income. They've read two-three books on white hat practices and are trying to compete with, say a mob of savvy blackhatters buying Pay Per View (read: adware) traffic and stealing the commission.<p>And don't get me started on the numbers.<p>And then you realize that to the merchant itself, it doesn't really matter, because the profit at the end is so high that throwing millions out the window still doesn't even put a dent in the side of the business.
One pretty simple lesson: Save some of your money even if it's from passive income. Nothing lasts forever.<p>BTW: What's up with the "only make something meaningful" propaganda lately? Nothing wrong with profits, just keep in mind that you can't outsmart the whole world forever: like arbitrage in an efficient marketplace, your low hanging fruit are eventually picked by everyone.
Ah, I was that guy. Doing affiliate marketing, cashing $20k checks per month in my 20s, not saving a penny & partying endlessly. I was in the online meds industry. When someone's site went down you didn't know if it was a network issue or a raid by the DEA. In one example I had a series of spam sites that represented 0.5% of all pages index by Google. Google announced they indexed 1B pages & 50M of those were mine. You could throw a dart & hit those crappy affiliate links. Pretty funny looking back on it. Those were some sleazy fun times.
1) In a capitalist economy, the low-hanging fruit tend to disappear fast. This is by design. Unfortunately, the design is such that you can't have 1 great idea and then just rest on your laurels forever. On the bright side, this compels you to give more to the world, even as it challenges you to maintain balance.<p>2) In a career with a large creative (read: risky) component, it seems that booms and busts are the norm. I've seen this in web dev a lot- one year I'm unemployed for almost the whole year (but hey, I was the first death knight to level 80 on the server, sigh), another year you're making six figures at a hot-shot startup.<p>I think that the pros outweigh the cons, but you MUST be pragmatic about money and save for the downturns. I'm psyched that you enjoyed your boom times, but I think your lesson was well-learned.
I don't see how mkrecny can consider pay per click affiliate marketing "passive income", it can extremely lucrative as Will Holloway has displayed but it is by no means passive.<p>Here's how you "passively" earn money with PPC affiliate marketing:<p>1. Get conencted with advertisers and sorting through offers to promote<p>2. Set up landing pages<p>3. (Probably) create your own ad images and/or write your ad and landing page copy<p>4. Identifying your target market, whether it's keyword based in Google or demographic based in FB<p>5. Run traffic and then split testing just about everything to increase your conversion rate.<p>6. Monitor stats to make sure the advertiser isn't capping or shaving you (if you don't monitor this on a very active basis you run the risk of sending traffic down a black hole and all the ad spend the goes along with it)<p>7. Scope out new markets/offers/traffic sources for when the existing dries up.<p>8. Repeat some or all of steps 1 through 7 ad nauseum.<p>PPC affiliate marketing is a grind.
One thing I find frustrating is when people associate passive income with non-value producing shortcuts, scams, and poor ethics. Passive versus active income and scams versus providing real value are independent characteristics of a business; it's perfectly reasonable to create a "good" business that creates real value and earns passive income.<p>Passive income is one of my primary goals, so maybe that's why I feel like defending the term. Maybe the phrase just has bad connotations these days, but I don't think the idea of making money without having to actively work should come with immediate thoughts of shady affiliate programs and scummy endeavors.
Moral of the story doesn't have anything to do with passive income. The moral is to save some freaking money instead of spending every dime you have, and this is true whether you are making tons of money or just a little. (passively or not)<p>Also, why has "Passive Income" become such an evil thing around here? It doesn't have to be a scam or BS or something. It could just be someone did a ton of work on the front end and then gets paid for it over time "passively". I make money off of software that I spent lots of time on that creates value for people. The fact that people keep buying it now that it's done makes the income somewhat "passive" (still have to update things over time, but minimal relative to initial investment of time).<p>There is nothing wrong with passive income. There is something wrong with doing scammy fraudulent things with affiliate marketing. These 2 things don't overlap entirely so stop acting like they do. Frankly, both of these stories sound like they mostly didn't do anything scammy. They just made a lot of money and then spent a lot of money. Lots of people do that all the time with non-passive 9-5 jobs, but they don't get on the front page of HN.
It was a bit surreal to see two of my HN comments in a blog post on the front page of HN.<p>Since people are interested, here's another tale of my year running affiliate campaigns on Facebook.<p>By the time I got into the game the competition was already heating up. I spent most of my efforts scaling my dating site campaigns internationally because global traffic was a far more fertile field, with less competition and cheaper clicks.<p>After I had maxed out all the nations of the English speaking world, I started running campaigns in France (and I unwittingly and unintentionally advertised hard core porn on Facebook in France for at least a month because of the geographic based redirect of the dating site I was advertising, with a US based IP you saw a tame site, with a French IP explicit hardcore porn)<p>My greatest success however was in expanding my operation to Latin America.<p>In the industry the concept of banner blindness is crucial to understand. Click through rates go down over time, both for individual ads and for entire nations. Because a site like Facebook wants to maximize its CPM, higher click through rates are the way to get cheaper clicks and profit.<p>I took my profitable ads in English and ran them through Google translate into Spanish. It was something simple like "Meet Hot Girls".<p>The hardest part was finding a dating site that accepted South American traffic. Credit cards and e-commerce have a ways to go in the global South, and therefore the traffic is of much lower value because it converts much less.<p>I found a tame version of Adult Friend Finder without any nudity on it's landing page. At the time Friend Finder Networks stated that they accepted traffic from almost all of the South American countries.<p>The first day I ran my campaigns in Columbia & Venezuela the response was incredible. Just astounding.<p>In an English speaking country you would be lucky to get three people out of a thousand to click on one of your ads. That first day in Columbia I was getting ten people out of a thousand to click and the clicks just cost one penny each!<p>I was converting at a rate that Friend Finder was paying me 14 cents per click and in that first day I made over $5000 with very little ad spend.<p>A small ad spend was important because I had to pay FB daily but was only paid out every two weeks and I was just out of college with very little credit.<p>I could have made so much more in those days with an American Express Plum card and unlimited credit.<p>As the South American ad campaigns went on the click through rates trended closer to the rates of their Western counterparts. It is for this reason I think I might have been the first person to run dating ads on Facebook in Columbia.
In what way were these passive income stories? I think the moment they went to a conference or "obsessively" researched anything should be a fairly large clue.
This paragraph sickened me on so many levels:<p>"...An acquaintance in the biz once bribed a Facebook employee whose job it was to approve or deny ads on the platform. His inside man set his account to auto approve any ad he wanted. ..."<p>Just wait till some NSA employee starts selling gossip to TMZ or HR departments.
A couple of years ago, I was extremely ill and couldn't work. In my periods of relative lucidity, I was able to hack together websites and make approximately $4K/month, which was enough to live on if you ignored the $8K/month in medical bills.<p>My experience with them suggested that you needed to go through and do an entire new thing every three months, because that's about the time it would take any efficient scheme to be overwhelmed by other people discovering the efficiency of that scheme.
I hope you have asked for the agreement of both the authors to republish these stories.<p>I wouldn't want to see hn becoming your goto place to stuff your personal blog via copy&pasting and not adding yourself a single additional thought or idea.
Hearing the term "passive income" just reminds me of the Warrior Forum. What an ugly place. Especially when affiliate marketing is mentioned.<p>I understand someone can create an actual business, a SaaS or product (not some get rich quick e-book) and make passive income like that, but when I hear of affiliate marketing it just leaves a sour taste in my mouth. It just reminds me of people ripping off others or selling them sham, snake oil e-books for their own gain.
My biggest potential profit was during the American Idol reign of terror. At the time, the keyword in Adwords was 1/cent a click. You read that right. Literally, 200,000 impressions/minute with a click-through rate of 1.3%. Nearly 150,000 clicks in one hour. Given a dance related affiliate product, I could have turned $6,000 into $250,000 in less than a day. Sigh.<p>Oh yeah, another day, long ago, "Face" was not costing very much. The Face keyword shows up for 'face' and 'facebook'.
I don't have a goal of passive income, rather trying to turn my personal obsessions into an actual business. The nice thing about the OCD approach is you're going to do that hobby anyways. Job gets demanding I just take a break from the project but still I get 100 new users a month, which isn't tough for a free product but using the google play store I have no hosting costs for my app. Plus 100 users a month builds out a base for me to market my much more complex commercial app to once I've competed it.
Imagine if the navigational system of the web could be improved to the point where most users could easily find what they were looking for... so much so, that there was little room for middlemen ("affiliates").<p>Imagine further that the "calf-cow" model of the web could be replaced with something more decentralized, e.g. a "content-centric" network instead of a "source-centric" one... such that there would be little room for "selling" traffic.
The title should be "Two Stories of Affiliate Marketing Excess".<p>Seeing "Passive Income" I don't automatically assume affiliate marketing as the income source.
Interesting!<p>Will's experience is so akin to many people that got into affiliate marketing around the same time as I did. It ended up getting to the point where people slammed into the industry so fast that the only way to stay alive was to seek every competitive advantage you had.
"After a couple years of work, I was bringing in 20k a month... It lasted for 7 years before it hit the bottom... At that point I was burnt out and was running low on savings."<p>$20,000 * 12 * 7 = $1,680,000<p>I wonder what he was buying that made him run out of cash so quick!
Meta-comment on the article itself:<p>Story 2 seemed unrelated to passive income until I clicked through to the original HN comment and realised the blog post author hadn't quoted the line about Ziad being a passive income hacker.<p>I find these stories reinforce my (already negative) impressions of the "passive" income/affiliate business; if the purpose of this post/blog is to promote the "hacker's guide to passive income" book-in-progress, it certainly failed.
In other words tackle a really difficult problem that is aligned to your personal obsessions, such as in case A instead of doing marketing to fund movies, learn to develop cloud based video editing software to fund making movies instead because you have to make movies to test your edits anyways and that niche is extremely tough to code for so the competition while its there is very low.
Suddenly that advice from Paul Graham about "do things that don't scale" make even more sense.<p>If you want a space and its profits all to yourself, pick something that has a high barrier to entry, and isn't easily scalable. The more something takes time, effort, money, skill, talent, and endurance the less competitors you'll have.
I wonder, a successfull writer would be considered a "passive income" example here in HN?<p>It seems to me that the illusion of working hard for some months, writing a master piece, be ackonwledged a great writer, then, every 5 years writing a new hit and be wealthy forever while working on a bucolic house very similar to the passive income dream.
I've met a lot of affiliate marketers as well that can't handle the money. They're like athletes who are paid millions of dollars but still end-up broke in the end because they do not know the value of saving and preparing for the rainy days.
You can't expect a source of passive income to last forever without regular maintenance. Just like you can't plan on staying on the road forever after you let go of the driver's wheel or stop putting gas in the tank.
It seems the OP himself is generating passive income by creating an ebook on generating passive income. See: <a href="https://leanpub.com/passiveincome" rel="nofollow">https://leanpub.com/passiveincome</a>
I have a few questions. I am hoping to implement/try out making some passive income here, as I have enough free time to invest.<p>1. While I know its hard to replicate the $5000 day, how hard is it to profit $5/day consistently? How much effort would that require?<p>2. As a student working my way through college, any income that doesn't require an all day desk presence sounds very lucrative! Can anyone point me to where I can get started?<p>3. Searching the web for affiliate marketing seems to take me to the scary underbelly of the Internet which I'm afraid to scratch. Any definitive resources? Where does one find websites that offer money for clicks? Is there a standard platform or does it work company by company?